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McVicker v. Bogue Sound Yacht Club, Inc.

Court of Appeals of North Carolina

December 19, 2017


          Heard in the Court of Appeals 4 October 2017.

         Appeal by plaintiffs from order entered 4 March 2016 by Judge Benjamin G. Alford in Carteret County, No. 14 CVS 421 Superior Court.

          Harvell and Collins, P.A., by Russell C. Alexander and Wesley A. Collins, for plaintiff-appellants.

          Parker Poe Adams & Bernstein LLP, by Michael J. Crook, for defendant-appellee.

          TYSON, JUDGE.

         Joseph and Susan McVicker ("Plaintiffs") appeal from the trial court's order granting summary judgment to the Bogue Sound Yacht Club, Inc. ("Defendant" or "the Association"). We reverse the trial court's order and remand to the trial court for entry of summary judgment in favor of Plaintiffs.

         I. Background

         Defendant is a non-profit corporation, which operates the homeowners' association for the Bogue Sound Yacht Club subdivision located in Carteret County. Plaintiffs are lot owners within the subdivision. The subdivision is subject to the Amendment of Declaration of Covenants, Restrictions, and Easements of Bogue Sound Yacht Club.

         In October 2013, Plaintiffs hired independent contractors to cut trees and clear brush on their property in order to maintain the lot's appearance and to prevent overgrowth. Plaintiffs did not believe they were required to seek approval of the Architectural Control Committee prior to beginning this work to remove trees and clear brush on their lot and did not do so. Before work on the property was completed, Defendant sent Plaintiffs a "Notice of [Architectural Control Committee] Violation" demanding Plaintiffs stop clearing trees on their property "until the proper . . . application form and $250 Refundable Construction Bond has been submitted for approval." However, with crews already on site and nearly finished, Plaintiffs continued the work and completed it the following day.

         Plaintiffs eventually offered to submit the application, but refused to pay the requested $250 bond on the grounds such bond was not authorized either by the Covenants or applicable law. Defendant refused to accept Plaintiffs' application without the $250 bond and sent Plaintiffs notice of a hearing. The hearing notice alleged Plaintiffs' noncompliance with Association standards by clearing trees without following Defendant's purportedly required procedure. The hearing notice also notified Plaintiffs of a hearing to be held on 4 November 2013 before the board of directors, in order to determine whether the Association should impose a fine on Plaintiffs. The hearing notice invited Plaintiffs to be heard on the matter by attending the hearing in person or submitting a written response; Plaintiffs opted to attend the hearing.

         On 17 November, Defendant mailed Plaintiffs written notice of the Association's decision to allow a seven-day period for Plaintiffs to submit the application and construction bond. The notice indicated Plaintiffs' failure to comply within seven days would result in imposition of a fine of one hundred dollars per day for thirty days. On or about 10 December 2013, Plaintiffs submitted the $250 bond, under protest, along with the required application. Defendant retroactively approved Plaintiffs' application and returned the $250 bond in full. Yet, because the bond was purportedly not submitted within the seven-day period, Defendant assessed $1, 400 in fines. Defendant subsequently reduced the fines by twenty-five percent, to $1, 050.

         On 15 April 2014, Plaintiffs filed a verified complaint alleging two claims for declaratory relief and a claim for breach of fiduciary duty. Plaintiffs sought a declaration that: (1) Defendant failed to comply with requirements of the North Carolina Planned Community Act pertaining to the imposition of fines; and (2) Defendant is without authority to impose the construction bond. Additionally, Plaintiffs claimed Defendant had breached a fiduciary duty owed to Plaintiffs and other members of the Association by selectively enforcing covenants and "failing to evenly, uniformly, fairly and equitably apply the Covenants to its members."

         Defendant answered the complaint on 18 June 2014, and both parties moved for partial summary judgment. In Defendant's motion, Defendant contended pursuant to the Covenants and bylaws of Bogue Sound Yacht Club, Defendant "is empowered and required to maintain, keep up, and supervise the use and condition of the common areas in the subdivision" and to "regulate the use and maintenance of the properties within the subdivision through the rules and regulations promulgated by its Board of Directors through its Architectural Control Committee." Defendant claimed "[i]n furtherance of these rights and responsibilities, [Defendant] . . . requires that homeowners submit an application containing plans and specifications for work that may impact property values, other structures, natural vegetation, topography, [and] privacy . . . ." Part of this application process purportedly includes the power to additionally require a $250 construction bond. Defendant attached Plaintiff Joseph P. McVicker's deposition to support its motion.

         In support of their motion, Plaintiffs argued they were entitled to judgment as a matter of law, because the Covenants "contain no authority for the imposition of such a bond" and because Defendant is without authority to impose the bond, the failure to post the bond cannot serve as a basis for imposing a fine. Plaintiffs further asserted Defendant failed to give legally sufficient notice of the charge, as required by North Carolina law.

         The trial court heard the parties on their motions for partial summary judgment on 1 February 2016. On 4 March 2016, the court entered a written order granting Defendant's motion for partial summary judgment, denying Plaintiffs' motion, and dismissing with prejudice Plaintiffs' claims for declaratory relief. On 9 March 2016, Plaintiffs gave notice of appeal to this Court. In an opinion filed 6 December 2016, this Court dismissed Plaintiffs' appeal as interlocutory. McVicker v. Bogue Sound Yacht Club, Inc., ___ N.C.App. ___, 794 S.E.2d 560, 2016 WL 7100634 (unpublished). Plaintiffs subsequently dismissed their third claim for relief entitled "Breach of Fiduciary Duty and Selective Enforcement." Plaintiffs then filed their second notice of appeal to this Court on 10 March 2017.

         II. Jurisdiction

         Plaintiffs' appeal from the superior court's final order lies of right to this Court pursuant to N.C. Gen. Stat. § 7A-27(b) (2015).

         III. Issues

         Plaintiffs contend the trial court erred in granting summary judgment to Defendant on the issues of: (1) Defendant's authority to require a bond be submitted with a request for approval to Defendant prior to alterations, improvements or construction on Plaintiffs' lot; and (2) Defendant's imposition of a fine upon Plaintiffs.

         IV. Standard of Review

         Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (2015); see Draughon v. Harnett Cty. Bd. of Educ., 158 N.C.App. 208, 212, 580 S.E.2d 732, 737 (2003) (citation omitted), aff'd per curiam, 358 N.C. 131, 591 S.E.2d 521 (2004). "An issue is 'genuine' if it can be proven by substantial evidence and a fact is 'material' if it would constitute or irrevocably establish any material element of a claim or a defense." Lowe v. Bradford, 305 N.C. 366, 369, 289 S.E.2d 363, 366 (1982) (citations and internal quotation marks omitted).

         In reviewing a motion for summary judgment, the trial court must "view the pleadings and all other evidence in the record in the light most favorable to the nonmovant and draw all reasonable inferences in that party's favor." N.C. Farm Bureau Mut. Ins. Co. v. Sadler, 365 N.C. 178, 182, 711 S.E.2d 114, 117 (2011) (citation omitted). This Court reviews a trial court's summary judgment order de novo. Sturgill v. Ashe Mem'l Hosp., Inc., 186 N.C.App. 624, 626, 652 S.E.2d 302, 304 (2007), disc. review denied, 362 N.C. 180, 658 S.E.2d 662 (2008).

         V. Analysis

          Plaintiffs argue the trial court erred in granting summary judgment in favor of Defendant, because Defendant is not authorized to impose the construction bond and because Defendant failed to follow the North Carolina Planned Community ...

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